Mystery predators may have contributed to fiscal collapse in 2007: research

December 19, 2011

Market activity for Citigroup over a two-year period starting January 1, 2007. Top panel shows vertical bars for the daily high and low stock price. Lower panel shows total short interest (yellow), trading volume (gray), and daily change in short interest (red). Arrows indicate November 1, 2007. Image: arXiv:1112.3095v1 [q-fin.GN]

(PhysOrg.com) -- As the nation bristles, camps out, and opines against the destructive role of banks in bringing down the economy, a group of scientists has released a study that shows a critical piece of the puzzle went missing, and that piece continues to go ignored, to everyones peril, including the banks.

Their new study shows that banks themselves were under attack by other players on Wall Street. The study authors at the New England Complex Systems Institute (NECSI) retraced events to show that at a critical point in the financial crisis, the stock of Citigroup was attacked by traders by selling borrowed stock (short-selling) which may have caused others to sell in panic. The subsequent price drop enabled the attackers to buy the stock back at a much lower price.

This kind of illegal market manipulation is called a bear raid and the new study supports earlier suspicions that the raids played a role in the market crash.

The study has direct evidence. Through its analysis of stock market data not generally available to the public, namely the borrowing of shares, NECSI reconstructs the chain of events.

On November 1, 2007, the number of borrowed Citigroup shares jumped by 100 million shares, a value of almost $6 billion. Six days later, a similar number of shares was returned on a single day.

Shares are generally borrowed to sell on the market. The trading on November 1 was almost four times the usual volume. The newly borrowed shares represented over three-quarters of the volume on that day. When a large volume of shares is sold it can drive prices down. The price of shares that day dropped by almost 7 percent. By the time the shares were returned, it had dropped nearly 20 percent.

Professor Yaneer Bar-Yam, President of NECSI, maintains this was no "freak" or coincidental event. "When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion."

The NECSI scholars are also voicing concern about how the incident was allowed to happen. Selling shares to deliberately cause a price drop to induce others to buy or sell is illegal, but enforcing the law after it is violated is much less effective than preventing it from happening in the first place, they maintain.

"There used to be a rule that prevented it from happening by forbidding borrowed shares from being sold in large blocks that drive the price down," said Bar-Yam. "The Securities and Exchange Commission repealed that rule, known as the price test or uptick rule, on July 6, 2007."

Last year, the authors of the report sent preliminary results of their study to the financial services committee of Congress, and Congressmen Barney Frank and Ed Perlmutter sent it to the SEC.

Unfortunately, Professor Bar-Yam says that he hasnt seen any action by the SEC to identify or prosecute those responsible or to prevent its occurring in the future.

After the market crash, the SEC received thousands of requests from the public to reinstate the price test rule. Hedge funds that invest the money of wealthy individuals opposed its reinstatement. Eventually, the SEC put into place an "alternative" rule that only applies a price test when the price of a share drops more than 10 percent.

Professor Bar-Yam points out, "This watered-down rule would not have stopped the bear raid on Citigroup on November 1, 2007. This is only one example of the deleterious effects of the weakened rule. The overall effect of unregulated selling of borrowed shares is surely much larger and continues today."

More information:
Evidence of market manipulation in the financial crisis, arXiv:1112.3095v1 [q-fin.GN] arxiv.org/abs/1112.3095

AbstractWe provide direct evidence of market manipulation at the beginning of the financial crisis in November 2007. The type of manipulation, a "bear raid," would have been prevented by a regulation that was repealed by the Securities and Exchange Commission in July 2007. The regulation, the uptick rule, was designed to prevent manipulation and promote stability and was in force from 1938 as a key part of the government response to the 1928 market crash and its aftermath. On November 1, 2007, Citigroup experienced an unusual increase in trading volume and decrease in price. Our analysis of financial industry data shows that this decline coincided with an anomalous increase in borrowed shares, the selling of which would be a large fraction of the total trading volume. The selling of borrowed shares cannot be explained by news events as there is no corresponding increase in selling by share owners. A similar number of shares were returned on a single day six days later. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted effort to drive down Citigroup's stock price and achieve a profit, i.e., a bear raid. Interpretations and analyses of financial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not sufficiently transparent to reveal even major market manipulation events. Our results point to the need for regulations that prevent intentional actions that cause markets to deviate from equilibrium and contribute to crashes. Enforcement actions cannot reverse severe damage to the economic system. The current "alternative" uptick rule which is only in effect for stocks dropping by over 10% in a single day is insufficient. Prevention may be achieved through improved availability of market data and the original uptick rule or other transaction limitations.

Related Stories

(PhysOrg.com) -- A new study by researchers at the New England Complex Systems Institute found that interpretations of data from an SEC pilot program used to justify the repeal of the "uptick rule" in the summer of 2007 are ...

(PhysOrg.com) -- Since early October 2008, when the Dow Jones Industrial Average began its drop that reached a low point the following March, many questions have been raised - particularly about what caused the crash and ...

Recommended for you

The recent suicide of Brandy Vela, a teen in Texas City, Texas, was a potent reminder of the sometimes tragic consequences of bullying. According to Vela's parents, the teen fatally shot herself Nov. 29 following months of ...

(Phys.org)—Douglas Petrovich, an archaeologist with Ontario's Wilfrid-Laurier University in Canada has sparked controversy in the ancient history scholarly community by making claims that he has found proof that Hebrew ...

Since 2008, MIT economist Tavneet Suri has studied the financial and social impacts of Kenyan mobile-money services, which allow users to store and exchange monetary values via mobile phone. Her work has shown that these ...

Researchers have discovered a dinosaur tail complete with its feathers trapped in a piece of amber. The finding reported in Current Biology on December 8 helps to fill in details of the dinosaurs' feather structure and evolution, ...

89 comments

So, no naked shorts - that's legal. Note that a bear raid has only a temporary effect if there's no real reason for the stock to go down. But there was a real reason. In fact, due to selling bad paper (CDSs) that doesn't have to be marked to market (FASB rule 157 changed) the banks are all actually worth less than zero now. Only various explicit and stealth bailouts by taxpayers have them worth anything other than zero as is. That's the power of bribery.They keep any profits and bonuses, we pay for the losses. I trade for a living, these guys don't know squat about what's going on.

This may not have been illegal at the time it was done, but these records are kept somewhere. If the SEC wanted to find out who was doing this, they could. The regulation was put in place for a valid reason. It helped protect the market from manipulation (pure market capitalism) for 79 years, and needs to be back in force. When systems and markets are strained and unstable in the first place due to bad policies, protections like this helps keep things from reaching the tipping point.

IMO contemporary society just ignores the fact, at the 1937 the energy of one barrel of oil was sufficient for production of another 131 barrels or so. At the beginning of 70's it was just 17 barrels and now the energy of one barrel or oil is sufficient only for production of five to seven barrels of oil. Nevertheless the price of oil raises a much slower way, because 1) increasing amount of oil is consumed just at the place of oil field, the cost of transportation and oil treatment remains the same 2) the private companies are lying about actual state of fossil fuel reserves, as it enables them to mine even faster.

The so-called renewable energy sources just convert the problem of energy shortage to the raw materials shortage. The only conceptual solution is the implementation of whole new paradigm for energy production, i.e. the cold fusion.

Putting aside the fact that no economy can sustain a consistent trade deficit, the rules that were put in place as a result of the lessons learned in the 1930's are being removed or neutralized by those that see them as obstuctions to their aims. Lobbying is institutionalized bribery and is the cancer that WILL eventually kill the "goose that laid the golden egg." While Herman Cain may not have been a credible candidate, his idea to keep legislation simple, not allowing 1900 page unread bills to pass thus allowing abuses to reside within is quite credible and worthy.I for one, will vote out all incumbents and do all I can to purge the body politic to begin again. Please note how each economic depression occurs at a intervals just beyond living memory. Not just a coincidence.

I read this article and the paper with only passing interest and half an eye until I noticed the mystery predator lurking on page 4 of the paper. Traders yak incessantly of bears and bulls, long and short. Here their mystery creature is the long tailed Black Swan.

Yup, it's always Wall Street and the Banks fault. I guess Fannie Mae and Freddie Mac NEVER EXISTED. I guess the Federals Reserve(with no reputation of predicting recessions) keeping interest rates artificially low NEVER HAPPENED. I guess the lawsuits by Acorn against banks for not lending money to those who couldn't pay it back NEVER HAPPENED.

I see, just another proponent of energetic lobby, who isn't willing to accept its role in the origin of the economical crisis...;-) Why to bother with various conspiratorial theories of fiscal collapse and with huge salaries of bank managers - when the actual source of problem is right there? The less or more hidden cost of energy resources. Cost of energy distribution, conversion and storage. The cost of oil wars. This is how the prices of food and oil are related.

We aren't suffering with financial crisis. We are suffering with energetic crisis! You apparently didn't realize it already. I can understand, you're nervous from this information, but I'm here for the whole rest of people, not for some censor trolls. It has no meaning to organize social revolutions, if we don't switch the source of energy.

"Bear raids" are no more responsible for the initial instability that they rode than a surfer is for the wave she rides. The surfboard can influence the wave's motion, but it was going to move even if no one intentionally surfed it. This is just critiquing the deck chairs. If you want the culprits, look for what caused the instability in the first place... Fanny, the Fed, and Congress.

Market manipulation is still illegal. What was repealed was a regulation that was preventive. Here is a key SEC quote that justified the repeal

SEC July 6, 2007: Uptick rule repeal

"....todays markets are characterized by high levels of transparency and regulatory surveillance. These characteristics greatly reduce the risk of undetected manipulation and permit regulators to monitor for the types of activities that current price test restrictions are designed to prevent. In addition, we note that the general anti-fraud and anti-manipulation provisions of the federal securities laws continue to prohibit activity designed to improperly influence the price of a security."

(1 of 3) I did a study of the abuse of the uptick rule suspension on my own when it was happening. Not scientific, but manipulation was obvious. The people who got rid of the regulations now work for the World Bank or they have retired to villas overseas. Look up Phillip Graham and his wife. They were instrumental in getting rid of some regulation just before the Enron scandal. When that operation got shut down they worked out a way to "test" the suspension of the uptick rule for about two years. Since nobody wanted suspicious activity during the test period, the raiders kept their hands off. But once the study was over and the SEC had ruled to suspend the uptick rule it only took two months for the raids to begin.

Check out who was on the SEC board when the test period and youll see who participated in destabilizing our stock market. Then check out what jobs they hold now and youll see how they are living high and mighty in the halls of free market capitalism. Both Bush and Obama tried to get the uptick rule reinstated, and Senator Harry Reid of Nevada was one of the most outspoken about getting the rule reinstated, but then he voted down his own measures meant to plug the gap. Collusion is rampant. It only takes a little digging to find the names and occupations of those involved. Most of them worked extensively with building the groundwork for getting rid of the rule over a ten year period beginning in 1999 and 2000. Look for the ones who are with the SEC and also on the boards of major mortgage markets. Some are even in the oil industry. An interesting development came up while I was digging. Standard and Poors is neck deep in collusion. Their board members have fingers in all the pies.

3/4)I hate to say it, but Callippo is not completely wrong about what happened in the oil markets. When oil went from $117 to $23 per barrel in just a month there was naked short-selling and sequestering of oil to hide a surplus. 60 Minutes did an extensive investigation on that and found that it was likely that the oil market was the target of short-selling by its own traders to make a profit off on sharp decline of oil prices. Prices for a barrel of oil rose as soon as Bush proposed stopping the subsidies. That was right after he became a lame-duck two years before he left office. Oil prices rose for two years with justifications of war in the middle east. The price of oil was at an all-time high in mid-July, 2008. When it looked like Obama was the front runner they prices skyrocketed. Then, perfectly timed with the mortgage market decline, oil prices dropped to $23 a barrel, but the wars in the middle east hadn't changed. It was a short-sell spree.

Then, also perfectly timed, the short selling and price manipulation stopped a mere three days before Obama took up residence in the White House. Prices stabilized and gas was now permanently $3.50 to $4.00 a gallon. We would never see $2.00 per gallon again. It was so slick, so well timed, that the mortgage loan collapse covered most of the inexplicable activity, and outrage at the two bailouts, one by Bush and one by Obama, took precedence in everyones minds. The price of oil per barrel, and the price of a gallon of gas stabilized so quickly it looked like the work of Harry Houdini, the escape artist. Talk about bailing outthey made major profits on the rise of gas prices over a two year period. Then they manipulated the market by short-selling oil shares traded in the same bundles with bad mortgages. When they had milked the short-selling for all they could get they backed out and let gas prices stabilize at an all-time high for the US. You can look up the 60 minutes segment.

If anyone wants more references I have 3 full pages of Cited Works from the paper I did on this subject. I checked the congressional records, the SEC minutes from the uptick rule, the list of board members that were on the SEC test program, and even checked what those people were doing a year after it all happened. Most had retired in splendor. If you do nothing else, look up Christopher Cox, who was Chairman of the U.S. Securities and Exchange Commission during the testing and abolishing of the uptick rule. He was neck deep in the whole program.

Wish I could pass on all found out about it, but most aren't interested in how gas prices went from $2.59 a gallon in 2006 to $4.89 a gallon in 2008. And they dont want to know how Standard and Poors rated oil stocks, bundled with bogus mortgages, as triple A, then devalued the bundles as soon as oil was no longer bundled with the mortgages. Once they had taken their profits from short sales, they slid out of site like sidewinders (rattlesnakes) and hissed as loud as the next snake over their supposed losses.

Sorry, my tirade is over now. Contact me if you want the references for the research I did.

People do this because they think that no one can see them. They are badly mistaken. When the time comes for their judgement they will realize [too late] that there is an omniscient eye that recorded everything they've done.

Ahh... The mods deleted my parody of callippo/rawa1. :-( Oh well at least I got some chuckles creating it. :-)

Anyway, yeah callippo actually makes a number of good points about the end of cheap energy, but then gives everyone the excuse they need to completely ignore it by saying "COLD FUSION SOLVES THE PROBLEM!!!!" which is amazingly typical of rawa1/callippo - so close to being a quality contributor to the discussion, but yet so far away.

If anyone wants more references I have 3 full pages of Cited Works from the paper I did on this subject. I checked the congressional records, the SEC minutes from the uptick rule, the list of board members that were on the SEC test program, and even checked what those people were doing a year after it all happened. Most had retired in splendor. If you do nothing else, look up Christopher Cox, who was Chairman of the U.S. Securities and Exchange Commission during the testing and abolishing of the uptick rule. He was neck deep in the whole program.

So the govt needs more money to do its job? More staff, more power? SEC ignored Madoff for 10 years. FDR hired Joe Kennedy to head SEC because he was a crook.

But. But. But... According to Libertairn - industry propaganda groups like the Cato Institute and the American Enterprise Institute and the Competitive Enterprise Institute and the Heritage foundation, America needs LESS STOCK MARKET REGULATION, not more.

Less regulation means more freedom for business to rape the consumer, and without that how can you expect them to afford to hire a workforce to helpe them to it?

I explained here already, why oil prices aren't driven with supply and demand equilibrium, being kept artificially low. The companies are lying about actual state of fossil fuel reserves, as it enables them to increase mining quotas. They will mine oil fields until it will remain completely dry suddenly. After then we would face very interesting things, because the building of cold fusion infrastructure will take a years, even if it would work perfectly. Two or three billions of people will extinct fast, the rest will suffer with deepest poverty. Nobody, even the richest persons will protect their property against gangs of desperate vandals willing to kill everyone just for bit of food.

The western word should decide, whether it really wants to face such a perspective.

I explained here already, why oil prices aren't driven with supply and demand equilibrium, being kept artificially low. The mining companies are lying about actual state of fossil fuel reserves, as it enables them to increase mining quotas. They will mine oil fields until it will remain completely dry suddenly. After then we would face very interesting things, because the building of cold fusion infrastructure will take a years, even if it would work perfectly. Two or three billions of people will extinct fast, the rest will suffer with deepest poverty. Nobody, even the richest persons will protect their property against gangs of desperate vandals willing to kill everyone just for bit of food.

The western world should decide, whether it really wants to face such desolate perspective.

First off, way to double post. Second off, way to completely jump the shark. We dont have any short term solution to oil running out. NONE. So it doesnt make any sense AT ALL for the oil companies to collude to keep prices low. They would make much more money by NOT lying about the state of oil reserves because we CANT JUST SWITCH TO COLD FUSION BECAUSE IT IS A FANTASY! We would be forced to pay the higher price and the oil companies would get rich pumping the last of the oil instead of barely squeezing minimum margins out of the last few drops.

Besides the magnitude of collusion necessary to create such a lie is mind boggling. Do you have any idea how many separate companies there are? This would require the buy in of ALL of them and nearly all of their employees. Millions of people would have to be in on it. And they would have to be colluding to make LESS money.

I can buy that Cin. It was pretty obvious that the dramatic jump in gas prices preceded the crash. People have to get to work, before they can get money from work to pay for a mortgage. Transportation costs skyrocketed prior to the crash and not just for people, but also for businesses.

Economics, like politics, cannot be allowed to be operate by itself Unmanaged. This was obvious to the People who designed and constructed the investment markets. These markets operate for Their benefit, nor yours.

You will note how laws are changed and passed during times of prosperity which enable market Manipulation in specific ways for specific Reasons later on. Loopholes are not found by clever people - they are CREATED for clever people to take advantage of in predictable ways.

The Reasons for these Machinations may only be apparent years or decades after the fact. Calliope is right. The world is again on the brink of fundamental Change. And the sad fact is that the old must be destroyed before the new can begin. The US housing bubble was used to destroy. Its effects were exported worldwide. Revolution ensues. Atlanta burns. Heads fall into baskets.

This is why the recurring Symbol we see is the Phoenix rising from the ashes of it's own demise.

It's not about fossil fuel lobby. In 18 years since 1994 nobody has attempted to replicate these thirty publications, in peer reviewed press the less. The physicists managed to ignore thirty publications for twenty years - does it appear normal for you? The only explanation is the subject of this research itself.

Apparently, for the rest of physicists is more comfortable to pretend, this solution doesn't exist, rather than to risk their own energy production, conversion and storage research. Apparently, the contemporary civilization has thousands of physicists - but no tools, how to convince them to become useful for the rest of civilization.

I'm not talking about oil running out. I'm talking about sequestering oil in tanks that supply cities and neighborhoods to make it look scarce. The inflation of the price of oil took two years of taking gas production facilities off-line, and closing down rigs because of a little wind in the Gulf of Mexico. Every season had another reason for increases; too much demand for heating oil in winter, too much demand for gas for vacations in summer, too little supply from a war torn Middle East, threats from Hezbola and the Iraq war and price manipulation by OPEC, etc. Plants shut down for retooling, pipelines shut down for rusty leaks, the peasants in Africa stealing from pipelines, the Ukraine lost its right of way for pipelines crossing their territory from Russia to Europe, cost of delivery going up, There was always another reason for prices to rise. And it didn't take every employee's cooperation. It only took orders from the top and traders finding loopholes. The truth is . . .

The truth is there was plenty of oil coming into the country from overseas and from US production. It was just being manipulated. There were interviews with heating oil suppliers who confirmed that there was no supply shortage. If there had been a shortage they wouldn't have been able to deliver all that was demanded. Instead, the tanks holding supplies were being shut off just until the higher prices could be posted. Remember gas pumps shutting down mid-day to change the price of gasoline? Remember prices going up more than once a day? Remember the scares of thousands of oil rigs threatened by category 1 hurricanes that never even came close to the rigs? Think about how much you paid for gas one week and what it cost the next. The wars werent any worse from one day to the next, but the buzz from the oil companies made it sound like riots at the tanker loading facilities. Most of it was fear mongering. Dictators dont shut off the source of their wealth.

The big surprise to me was that when oil was being traded through overseas markets without regulations, the bundles of millions of barrels were tied up as derivatives in the same trading packages as mortgage loans, inseparable when traded. Remember the advertisements that you could buy into a share of a tanker and set the price you paid for gasoline months in advance? That was bundled and sequestered oil being traded as AAA+ derivatives that also contained bundles of bad loans. The price was through the roof not only because there was price manipulation of oil, but also because of the inflated prices of homes. And when the bubble began to disintegrate, the oil traders went into a frenzy to dump the sequestered oil into the markets. There were reports of hundreds of millions of barrels of oil suddenly found on the books on one particular day that had not been there the day before.

Suddenly supply exceeded demand. Do any of you remember those reports on the news?

When has supply of oil ever exceeded demand? Not since the 1960s when the price of gas was around $0.19 a gallon in Texas and there were signs in the gas stations "Drive 90 mph and freeze the yanks." The shortage was a joke in Texas in 1972 and 1973, and the lines at the gas pumps wound around several city blocks. You could only fill up on certain days, and you had to have vouchers to get your tank filled or you were restricted to a certain number of gallons per week. But there was no shortage. Just fear mongering.

So there is precedent for false shortages, and there is precedent for price gouging too.

Remember Enron and the rolling blackouts in California in 2000 and 2001? The truth of that wasn't fully disclosed for years, and Enron held California to a contract they insisted on at billions of dollars higher than the rest of the country was paying for energy. (Almost at gunpoint: Pay up or we shut off the electricity.) They did that by strategically shutting down plants.

-- Oil speculation: What Congress wants[;] Lawmakers are threatening to get tough on traders and have introduced 9 different bills. But it's unclear if they'll succeed. CNNMoney.com 24 June 2008http://money.cnn....?cnn=yes

Wish I could pass on all found out about it, but most aren't interested in how gas prices went from $2.59 a gallon in 2006 to $4.89 a gallon in 2008.

You don't think the Feb 2008 explosion of the Texas refinery (third largest in the USA) had anything to do with this? It wasn't until it came back online that the price started dropping again. Not to say there wasn't any manipulation or people legally taking advantage of a situation, but that's what I pay my mutual fund managers to do, same as any other 401k, IRA or stock holder.

There was very little press about the explosion after the initial reports, and it was an embarrasment to the industry. They didn't hype the effect on the price of gas or oil. They did not attribute shortages to that event when prices were rising. It was reported as another plant that had gone off-line during that earnings period. Besides, the price of oil had been rising for two years already.

I remember what I paid for a gallon of gas, because I was driving 140 miles round-trip every day to go to Shasta College in Redding from a little town in the mountains where I lived at the time. Every time gasolie prices went up I worried I would not be able to afford the gas from one week to the next. When I started at Shasta College in Jan. 2002 gas was at $1.89 a gallon. When it went up to $2.35 I had to find another scholarship to help defray the costs.

(I'm working on my master's degree now. I'm not just a nut with a cause.)

"We'll be fighting in the streetsWith our children at our feetAnd the morals that they worship will be goneAnd the Men who spurred us onSit in judgment of all wrongTHEY decide [not you Pudel] and the shotgun sings the song

"Change it had to comeWe knew it all alongWe were liberated from the fall that's allBut the world looks just the sameAnd history ain't changed'Cause the banners, they all flown in the last war"

"I'll tip my hat to the new constitutionTake a bow for the new revolutionSmile and grin at the change all around mePick up my guitar and playJust like yesterdayThen I'll get on my knees and prayWe don't get fooled againDon't get fooled againNo, no!

"Meet the new BossSame as the old Boss..."

-Bile is Inevitable. Your head chopping list was written for you. Dupe.

I misspoke. Prices did start to rise some shortly after the full scale of the Enron scandal came to light in 2002. But gas suddenly went form around $2.50 to over $4.50 during the period of 2006 to 2008. By that time I was already in Sacramento. Many people had to choose whether they would fill their gas tanks, or pay the mortgage. Commuting to work won out over missing one or two payments of a thirty year mortgage.

Sorry for misspellings in the previous post. Typing too fast and not checking before posting is a bad habit I need to break.

Who do you mean by 'we'? You, who dont have the minimum facts necessary to make informed decisions, or People in Charge, who do? And what makes you think you would ever need to know?

Apparently, for the rest of physicists is more comfortable to pretend, this solution doesn't exist, rather than to risk their own energy production, conversion and storage research.

Rawa/calliope/jigga fails to appreciate the Value of consuming resources in contentious parts of the world in order to maintain influence there. He/she/it fails to appreciate the inherent DANGER to world Stability and Progress, of technologies released before their Time, into a world which has not yet been prepared for such Change.

NOTHING will be allowed to endanger the existance of humanity. This includes tech which could potentially destabilize the world unpredictably and cause Those who Manage it to lose Control. Obviously. There is too much to lose.

He/she/it fails to appreciate the inherent DANGER to world Stability and Progress, of technologies released before their Time, into a world which has not yet been prepared for such Change

Which danger the cold fusion poses for people? The virus research is much more dangerous for human civilization than that. Without fossil fuel replacement we would face a REAL danger: the risk of nuclear confrontation, not to say about gradual environmental collapse. The cold fusion is just another step in human evolution.

Which danger the cold fusion poses for people? The virus research is much more dangerous for human civilization than that. Without fossil fuel replacement we would face a REAL danger: the risk of nuclear confrontation, not to say about gradual environmental collapse. The cold fusion is just another step in human evolution.

You are choosing to be naive? A new tech emerges. Markets collapse. The economies of countries which are dependent on the old tech, collapse. Unintended and Unscheduled revolution and war ensue. New Players move into the vacuum to assume control, and start establishing new liaisons with others.

Meanwhile isolationists enjoying their newfound independence from world events sue for protection and tariffs and sealed borders. Disgruntled despots set their sights on western trade and investments.

Come on dude, how many things could NOT go wrong?? Economics are not an optional state of events. They are central to the function of civilization.

A new tech emerges. Markets collapse. The economies of countries which are dependent on the old tech, collapse.

I'm not worrying the collapse of countries like the Iran or Venezuela. Do you? After all, energetic yield of cold fusion isn't so good yet. Recently another independent confirmation of cold fusion has been announced, but the COP is just about 200 percent. http://ecatfusion...t-fusionIt's sufficient enough for to take the cold fusion seriously from scientific perspective - but from technological one it's not enough for production of electric energy capable of powering the unit (the effectiveness of electricity production from low temperature heat is bellow 50%). So that cold fusion isn't even sustainable and it will take the years before it will start to compete the fossil fuels seriously. We wasted twenty years of research, so you shouldn't expect any miracles right now.

Armageddon? A repeat of the French Revolution? Cold Fusion? You guys are off your rockers. Way off. What about evidence instead of rhetoric? I presented, and will still produce references to back up my study. What evidence do you have for your claims?

The most likely outcome is a return to crushing poverty, and a horse and buggy economy, except for elites who will hoard energy for themselves. Invest in trains. They will become the arteries by which goods are spread to the populace. Trains can run on coal, which is in abundant supply. The decay of infrastructure would probably be gradual, but eventually crippling. The biggest worry for the future will be disease, not gasoline or cold fusion.

The cold fusion is just another step in human evolution.

No, its a step in the innovations made by humans, but it is not evolution, and not inevitable. And the possibility has not yet been proven to be reproducible, much less viable. Get real.

I'm not worrying the collapse of countries like the Iran or Venezuela. Do you?

Collapse in the third world can bring on an independent islamic empire. You are perhaps familiar with the last time that this happened? Constantinople fell and spain was overrun.

Are you familiar with the meteoric rise of the mongol empire? Spontaneous empires can erupt far faster today because the potential for population growth is far greater. Lifespan is doubled and infant mortality is a fraction of what it was.

Such empires will not emerge unless they are Planned to, in part because Influence is maintained in these danger areas. Leaders can be installed there like baathists or wahhabi who are beholden to the fundamental imperatives of overall Stability and Progress; no matter what they might say.

There is only one Empire. All others come from it. They are Constructed to achieve certain Goals, and then they are Dismantled. The people are thus kept in a state of constant Defeat ie domestication.

Collapse in the third world can bring on an independent islamic empire.

Actually just the lack of replacement for fossil fuel sources - the Islamic oil in particular - is what strengthens the position of conservative Islamic forces. We need to keep the price of oil down, but not artificially as for now, i.e. with using of oil wars - but with implementation of real fossil fuel replacement.

You seem to think that 'conservative Islamic forces' is all one thing. There are conservative Islamic forces who are acting to limit growth and prevent a caliphate. They are using oil profits to do this. They fear and loathe the people just as Leaders everywhere do.

In this world of unavoidable tribal warfare, it is kill or be killed. Beautiful, moral human beings cannot refrain from reproducing beyond their means. This turns them into monsters intent upon taking what they need from the other tribes in order to survive.

A Tribe of Leaders emerged amidst this chaos and misery, pledged to Manage this inevitable conflict in order to save the world. They have gotten very good at it.

They are no more immoral than the wife who can not refuse her husband because their religion tells them both that this would be immoral. They are no more immoral than the believers who persecute unbelievers because their religion tells them it is immoral NOT to.

They do what They have to do in order to Survive. We are not responsible for the biological equation which causes overgrowth and conflict. Leaders are not responsible for whatever They absolutely MUST do in order to maintain Stability and ensure Progress because of it.

That would be nice. But I wouldn't expect any new legislation to pass. The majority of congressional and senate members are dependent on campaign contributions from political action groups that include contributions from board members of major energy companies. Remeber, there is not just manipulation of oil prices, there is also manipulation of EPA standards. Obama backed off from a strong stance on new EPA rules. That attack comes not from oil companies, but from coal suppliers and electical plants that convert coal into electricity, and in the process produce billions of tons of polution.

Putting aside the fact that no economy can sustain a consistent trade deficit, the rules that were put in place as a result of the lessons learned in the 1930's are being removed or neutralized by those that see them as obstuctions to their aims. Lobbying is institutionalized bribery and is the cancer that WILL eventually kill the "goose that laid the golden egg." While Herman Cain may not have been a credible candidate, his idea to keep legislation simple, not allowing 1900 page unread bills to pass thus allowing abuses to reside within is quite credible and worthy.I for one, will vote out all incumbents and do all I can to purge the body politic to begin again. Please note how each economic depression occurs at a intervals just beyond living memory. Not just a coincidence.

People have missed the impact of dark pools, where big traders privately bring the price to a new level. Then the net is dumped on Wall Street, which can bring the price of illiquid stocks down to pennies. Savvy traders can then long the oversold stock and ride it back up on the investor's dime.

Dark pools are bad for transparency and make the rough market much more unfair for the small investor. Probably they suck capital from mutual funds as well, who aren't in on the take.

Why does the government not follow the money trail.That money didn't simply evaporate, it went into someones pocketor into the pockets of many someones.It can all be traced if there is a will to do so.

Both the executive and legislative branches are in bed with the Wall street bankers and have changed the laws according to the wishes of those who give money and power to these crooked politicians. When congress talks of regulation they are misleading the public. They make regulations that hurt main street America but, empower Wall Street to be ever more aggressive.The most recent legislation co-authored by Frank and Dodd hurt small investors and the small banks to the shear delight of the commercial banks. For example, U.S. citizens can no longer trade metals in the FOREX market and leverage was reduced to make it more difficult for small investors to get started. Yet, there is never any meaningful regulation such as requiring brokers to have a separate protected accounts for client funds like that which is required in England.The only hope to end the corruption is to vote out anyone who has served for more than three years.

I think you are missing the fact that Tea Party members, who have been in their seats for less than two years, are in favor of legislation that boosts the earnings and profits of big business. It is the Tea Party members who want to get rid of regulations that put a cap on the excesses of the energy marketplace. The Tea Party wants to foster a business-friendly economic climate. They oppose having business share in the cost of governing the nation. That should tell you something about the Tea Partiers. Its okay for business to make all the profits they can, but heaven forbid they should actually take part in assisting the government that fosters such an open business climate.

NO MORE PROFIT WITHOUT BALANCED TAXATION!!

Haven't they made enough off our backs already? Profits are higher now than they were before the recession began. I don't see any of those businesses hiring, do you? No, Bank of America plans to lay off 30,000 next year!

It would be possible to follow the money trail if any of them were actually interested in catching the crooks. No interest, no action. For instance, when it came to crunch time in plugging the short-sale "uptick rule" Senator Reid vetoed the bill he wrote and presented to the senate. There were 9 separate bills presented and not one made it to committee or any kind of vote.

The Tea Party didn't exist when the SEC dumped the uptick rule. Nor did they have anything to do with all the corruption going on. They have been unwitting dupes at times in that they have been against most if not all regulation when in fact regulation is good when it levels the playing field so that no one as an artificial advantage over another. Unfortunately, most regulation is intended to be so burdensome that small businesses either fail or don't get off the ground in the first place for lack of resources to deal with the regulations. This is the clear intent of the big business and crooked politicians regardless of political persuasion. In my lifetime, I have witnessed several types of businesses that could have been started out of one's garage that are now impossible to start without millions because of all the government red tape. Furthermore, big business can choose whether to pay the price or go foreign to evade the regulations...something small business can't do.

Alas, everyone thinks the person for whom they voted is a saint. If we would just limit our President and senators to one term and our congressmen to two terms via the voting booth, the government's marriage with Wall Street could be largely disrupted. I agree with Cin, there has been no interest in catching the crooks. Our financial meltdown makes the savings & loan scandal look like petty purse snatching. There should have been thousands of convictions by now but you can count the convictions on your thumbs.

I wonder if you have looked at the manifestos of the myriad branches of the Tea Party. I don't dispute that they weren't around when the fur flew. But they have some denialist viewpoints that disturb me profoundly.

If you haven't read them yet, I suggest you Google the following words: "tea party legislative agenda" and spend some valuable time on the important subject.

Each state has their own agenda, but some do agree.Such as denying the facts of global climate research. (They say it hasnt been proven when it has. They just dont want the truth to be true.)Such as making it illegal for the states to send federal taxes to the federal government unless they haven't found a purpose for the funds in-state. Such as making labor unions illegal. !!Such as rewriting the 1st amendment to make it illegal to write a journalism story that disagrees with the state's political viewpoint.

Such as digging into the coffers of higher education institutions and taking what they want for other purposes. Who would donate to a university if their donations were stolen and reapportioned according to the ruling partys agenda? Who would endow the arts or the sciences if the programs were only allowed to follow Tea Party agendas? No more genetics. No more climatology. No more freedom of expression. No more journalists. No more geology, because it disagrees with the bibles timeline. No more archeology of hominids. No more physics, because it posits the existence of a physical world that runs on mathematical principles. No more computer science, because it might impinge on Gods prerogative with artificial intelligence. No more space exploration, because we were only meant to live here, and there is no other intelligence according to the bible.

I could go on about university programs, but you can probably come up with others on your own if you think about what fundamentalist, racist, capitalist agendas are not in line with what is taught in our universities.

Such as proposing education reform that gets rid of the public school system by gutting the funding for federal school programs. In this case they propose offering parents the chance to send their children to the school of their choice and removing that funding from the current school system.

I can see it now. Only inner city, or ethnically different children would attend the schools that are left in the system, and the quality of education would drastically shift in favor of the rich and the vanishing middle class. We would be left with a vast population of homeless, unfed, uneducated poor such as India has now. Would we indoctrinate them to their caste system too?

Such as making wholesale changes to the constitution that agree with only Tea Party agendas, not with the viewpoints of the majority of the populace. That is too scary for words. We have a constitution that covers everyone for a purpose. But the Tea Party would force their values and judgments on the rest of the country. Who spoke up and made them infallible gods?

I think the Tea Party is the party of the selfish, and the politically connected. That makes them not just stubborn politicians with an agenda. It makes them dangerous to the health, education, and welfare of anybody who does not agree with their political agenda. I happen to be one of those who does not agree.

The Tea Party does not represent me. So why should they be allowed to run roughshod over my beliefs and rights?

Going back to the question of small businesses and getting off the ground. There is a proposal by the Tea Party that would give tax breaks to "angel investors." Let me quote them directly. Following are the legislative proposals by the South Carolina Tea Party for creating jobs.

"Lawsuit Abuse Reform" The Caucus will fight to protect our stateâs businesses from the threat of an unjustified, debilitating lawsuit, while preserving everyone's access to our legal system. (Chairman Harrison)"Bill Wylie Entrepreneurship Act" This legislation will allow Angel Investors to claim an income tax credit for providing funding to small business start-ups in our state. (Reps. Loftis, Stringer)"Point of Sale" Reforming our Point of Sale reassessment requirements will jump-start our real estate market. (Rep. Merrill)"

Funny, but I don't see anything there that would benefit small businesses. Most small businesses dont get sued for millions and billions of dollars, so tort reform is to save the major corporations from being held responsible for unethical business practices. Think of thalidomide babies and tobacco companies.

By preserving everyone's access to the legal system, they mean you are welcome to hire a lawyer and pay them outrageous fees to fight a system that will not help you recoup your medical costs and lost wages.

Regarding the "Bill Wylie" bill, I dont know if you are aware of the business practice of fostering a small company until they become successful, then taking them over. The "angel investors" are in fact large corporations that will get tax deductions for investing in "small cap" mutual funds such as the ones in your 401K plans. Does your company match your contribution to a certain extent like mine did? If the answer is yes, then your company is an "angel investor."

Small cap mutual funds are: "funds that only invest in . . . in smaller and up and coming companies. These companies are usually more volatile than larger companies because they are usually newer and haven't proven themselves like the larger companies have. Therefore, there is more room for growth with a smaller company, you just take on more risk that it will go under."

So, if a large corporation invests a portion of its capital in small cap mutual funds, then every dime of those investments is eligible for tax credits. Then, someday down the road, when the little company has developed some innovation, the big corporations hire corporate raiders, and take over the little company for as little as possible. Sure, one or two guys at the helm of the small company get rich, but everyone else just gets laid off.

A really special job creation scheme, huh? Temporary jobs with tax deductions for the rich.

Now, I had to look up Point of Sales in real estate to understand that last Job Creation legislation. I found out that South Carolina has actually already passed their new law on this point. The story of what it means and who benefits is here:http://www.island...ate.html

The new law allows a 25 percent drop in taxes assessed on a property sold at a higher price than its assessed value. Real estate agents love the new law because it helps sales. But, "the discount only applies to property taxed at the 6-percent rate, such as commercial and rental property or second homes."

So, no homeowners will benefit from this law, only people who own rental or commercial property will benefit. I don't see how that will help to create jobs. Nobody is building new property. This law applies to existing buildings sold at a higher price.

Vendicar_Decarian, If I had the solutions do you think I would be here in the middle of the night researching the causes, and the answers others have come up with? I wish I did have the solutions. I would be partying with all the other rich people. But at least I can understand the subjects and make responsible, informed decisions from what I know. I'm not like ryggesogn2. I can't just listen to a party line and assume it is correct (and spout it back ad nauseum.) I have to know what it means and why someone said it. I have to understand the implications and the consequences. It's the only sane way to get through the cluster-f that is our political machinery today.

I also happen to be spending Christmas very much alone. Family all 1,500 miles away. School's out and friends have all gone home. And I can't sleep. Too much on my mind.

This paper isn't very good science. It makes an assumption and then fits the data too arrive at the desired conclusion. Prices fluctuate as investors constantly reassess valuations from their own personal perspective. Analyzing one large trade on one stock is not a very convincing way to reaearch market behavior.

For example, if C was fairly valued, the (short covering) purchase made 6 days later might have had a positive affect on the price. It didn't, and investors who 'panicked' and sold into the "bear raid" were lucky, they avoided a further 90% loss in the share price over the next year.

I think some case can be made in favor of the "uptick rule" but with stocks trading in fractional cents it seems like it wouldn't be as effective as it was when they traded in 1/8ths. However, considering the vast number of people who cheat at online gaming, it indicates that we should assume stock market participants will cheat as well, and therefore the markets do need to be regulated.

"If I had the solutions do you think I would be here in the middle of the night researching the causes, and the answers others have come up with?" - Cin

There are solutions to every problem. For example the solution to rampant stock speculation is to place limits on how soon you can sell a stock after you purchase it.

Forcing consumers to hold onto a stock for a year after it's purchase would have a nice calming effect on the volatility of the stock market.

As to the TeaPublicans.. Really Libertarians, the problem is unsolveable. Their proposals are all directed by corporate interests to make the problems they are concerned about even worse than they are now, and do it in a manner that profits the corporations that are pushing the agenda.

Ron Paul for example is a favorite of the TeaTards and he has promised in his first year to cut government spending by 1 trillion dollars - a spending cut that will immediately put 30 to 45 million Americans out of work.

All problems don't have solutions which can be viably implemented. Your suggestion for placing a minimum holding period on a stock purchase would not have the affect you envision. It would reduce liquidity, increase market volatility, distort price discovery, and increase manipulation.

If we would just limit our President and senators to one term and our congressmen to two terms via the voting booth, the government's marriage with Wall Street could be largely disrupted.

That wouldn't help at all. Democracy is self defeating in that it is at its very core a system whereby votes are bought for favors. If 70% of the population are lower to middle class and a politician promises new free money programs so that Shantiqua and Keshawn get another hundred or two a month because they have 7 little mouths to feed do you think they give a flying fuck if that free money program is ultimately good for the country or only that it is good for them in the immediate future? Do you think they care that the politician offering that money to them also wants to remove regulations from the banking industry and institute socialist policies designed to keep the population indebted to and reliant on the government for their weekly cheese and milk? Of course not, they want the $$$

Speaking of free money and buying votes. When Obama was running for president word was going around here in the south that blacks were going to get $240,000 each for "restitution" if he was voted into office. They were hearing about this in their chuches and some were bragging about how they were going to spend the money. Obviously nothing came of this except its actual intent - to get people out to vote who wouldn't normally.

Is there any evidence that there was top-down dissemination of this info? People are perfectly capable of coming up with their own BS without the DNC telling them so.And such churches should lose their tax exemptions. Conservative preachers are just as a egregious. Can't we just agree to keep politics off the pulpit?

Unfortunately no because:

The paranoid spokesman sees the fate of conspiracy in apocalyptic termshe traffics in the birth and death of whole worlds, whole political orders, whole systems of human values. He is always manning the barricades of civilization. He constantly lives at a turning point. Like religious millenialists he expresses the anxiety of those who are living through the last days and he is sometimes disposed to set a date fort the apocalypse.

http://karws.gso....yle.htmlThey see every little political disagreement as potentially leading to Armageddon. They think they are super heroes.

Please Mr Hollman, refrain from using obvious African names in a derogatory and defamatory fashion. So you are for extreme predatory capitalism. We all know that leads to corporate socialism, defined by Benito Mussolini many decades ago first as syndicalism=fascism. If you are in fact a fascist, own up to it. There are those in south Italy that still maintain statues of 'Il Duce'. Il Duce was also a monarchist, and his governance at one decimated the mafia but also discredited forever in Italy all ideas of monarchy. It all seems great if you are the perfumed and fawned over idiot in the ivory palace. Not so great if you are like the Roman colonii, the ones that had to DO the fawning and all the WORK. That is the essential fallacy of capitalism and especially fascism, the devaluation of labor. Labor is the essential catalyst for the generation of wealth, the only way to restore entropy to economic systems. Who do you THINK buys products of factories? Exploiters make nothing!